Lotus opts to wait for higher uranium prices before restarting production at Kayelekera
Lotus says its Kayelekera Project ranks as one of the lowest capital cost uranium projects globally
Source: iStock
Mentioned
KEY POINTS
- Lotus Resources DFS confirms a "low-cost, quick restart" for the Kayelekera Project in Malawi
- The company will wait for higher uranium prices before making a final investment decision
Lotus Resources (ASX: LOT) says its Kayelekera Project in Malawi ranks as one of the lowest capital cost uranium projects globally and able to recommence production in just 15 months.
Still, the company insists on waiting for uranium prices to reach an appropriate level before making a final investment decision.
From a cost perspective, all-in sustaining costs sit at US$36.2/lb (during the first 7 years of production) compared to current uranium spot prices of US$48.70.
"We believe we are still in the early stages of the uranium market up cycle and are confident that the uranium price still has some way to go before it peaks," said Managing Director Keith Bowes.
Kayelekera Restart DFS at a glance
Key Outputs | Life of Mine Total/Average |
|---|---|
Mine Life (Years) | 9.5 |
Steady State Annual Production (MLbs) | 2.42 |
Life of Mine Production (Mlbs) | 19.3 |
AISC (US$/lb) | 37.70 |
Initial Capital Cost (US$m) | 78.3 |
Capital Cost Contingency (US$m) | 9.5 |
Source: Lotus Resources | Table: Market Index
Low costs backed by exploration upside
Initial upfront capital costs remain "one of the lowest in the industry", according to Bowes.
"The operating costs during steady state in the initial mining phase (i.e. before stockpile treatment commences) now sit at US$29.1/lb U3O8, well within the second quartile costs for current and planned uranium producers," he added.
Kayelekera has a current mine life of 9.5 years, subject to further exploration upside from near-by tenements Livingstonia and Chilumba.
Regional exploration at Livingstonia successfully defined a Mineral Resource Estimate of 4.8m lbs of inferred and at Chilumba, a 1,500m drilling program was recently completed and pending assay results.
Next steps
Lotus plans to advance several key areas ahead of its final investment decision including:
Uranium offtake agreements
Financing negotiations
Scope and costs for front-end engineering design
In terms of offtake, Bowes said the company will "look to lock in prices that ensure long-term profitability and good returns for our investors."
"Momentum in the market is positive with strong underlying fundamentals which indicate continuing price increases that could see the necessary pricing levels achieved relatively soon,' noted the DFS study.
Lotus Resources share price chart
